Even the most ardent proponents of the India growth story would not have chosen India’s gigantic but ancient railway network as its brand ambassador. Yet, nothing is more symbolic of India’s transformation from an old economy into a modern, vibrant one than the turnaround in the fortunes of the Indian Railways, a turnaround which can, with some justification, be attributed in large measure to Railway Minister Lalu Prasad Yadav. The railway budget for 2007-08 is as remarkable for what it has not done as it is for what it has achieved. First and foremost, it has not added to the drain on the government’s resources. On the contrary, with an estimated cash surplus of Rs 20,000 crore, it is unique among the larger arms of the government for being in a position to add to the treasury by way of a handsome dividend, while having enough left over to meet its own requirements for future growth. It has not added to inflation.
Passenger fares have been cut and freight rates have been left untouched, with carefully targeted discounts thrown in for good measure. While the two-rupee reduction in passenger fares at the lowest level may appear symbolic, it actually does make a difference to the poorest sections of society, for whom the railways continue to be the cheapest available form of public transport. The cuts on freight charges for key items like diesel, petrol, cement and iron ore will help mitigate pressure on prices to some extent, while ensuring that key infrastructure sectors maintain their growth momentum.
What has been achieved is equally impressive. Improved efficiencies in usage of rolling stock has led to higher volumes and improved cash flows — freight earnings have grown more than 15 per cent, while passenger revenues, despite no increases for the past four years, are estimated to grow by over 20 per cent. This has been largely due to the deployment of modern technologies and management practices. The development of high-speed freight corridors and introduction of modern double and triple-decker container trains will cheer India Inc.
Concerns remain, though. Increased volumes have heightened the stress on the railway network. The rising number of accidents and crime, as well as the new dimension of terror attacks, call for quick and massive corrective action. While palmtops and smart cards are welcome, basic amenities in stations are just that — basic. Nevertheless, the Railways have proved that it is possible to marry private sector best practices with the social responsibilities of the government.